Research

How Expanding EITC Will Benefit 1.5 Million Low-Income Older Workers

September 7, 2021

Brief— SCEPA's research finds nearly 1.5 million low-income older workers would benefit from an expansion of the popular Earned Income Tax Credit (EITC) program. The report—released by our Retirement Equity Lab (ReLab)—finds without expanding the EITC, the program actually lowers wages among non-educated workers, especially those over 55.

Authors: Teresa Ghilarducci, Aida Farmand, Bridget Fisher, and Siavash Radpour

A popular cash transfer program credited with lifting millions out of poverty, the Earned Income Tax Credit (EITC) also reduces wages for non-college educated workers, particularly older workers. Meanwhile, eligibility rules have long prevented most older workers from receiving EITC benefits at the same rate as their younger counterparts. Expanding EITC benefits permanently would offset some of these lost earnings and help stabilize older workers’ earnings. In 2021, Congress enacted a temporary EITC expansion—and our research shows that a permanently expanded EITC would benefit millions of older low-income workers.


Key findings

  • Permanently expanding the EITC will help offset earning losses for approximately 1.5 million low-income older workers. 
  • The EITC helps millions of low-income Americans survive, but also subsidizes low-wage work and suppresses wage growth for non-college educated workers, especially workers over 55. 
  • Over the next decade, the share of older workers over age 65 will increase by 50%, translating to an additional quarter million workers becoming eligible for the expanded EITC.

 

 Download the full policy note here.